Change to Self Assessment Threshold: Are you affected?
The world of tax is always evolving, and we understand how crucial it is for our clients to stay informed. Recent changes by HMRC regarding the Self-Assessment threshold could affect many taxpayers, and we’re here to break it down for you.
Increased Threshold for Self-Assessment from 2023-24
Starting from 6 April 2023, HMRC has announced a notable increase in the threshold for Self-Assessment for taxpayers who are taxed solely through PAYE. The previous limit was set at £100,000, but this has now risen to £150,000.
While on paper this does mean fewer individuals will need to submit Self Assessment returns, HMRC thresholds (including tax bands) drift upwards annually to match wage inflation.
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Impact on 2022-23 Tax Returns
It’s important to note that if you’re submitting a Self-Assessment tax return for the 2022-23 period, the earlier threshold of £100,000 still applies. However, taxpayers who have a reported income ranging between £100,000 and £150,000, and do not fit any other Self-Assessment criteria, can expect an “exit letter” from HMRC. Receiving this letter signifies that you won’t be required to file an annual Self-Assessment tax return, granted you meet the set qualifications.
Criteria for 2023-24 and Beyond
Despite the increased threshold for those taxed under PAYE, certain conditions will still necessitate a Self-Assessment tax return. You will have to file one if:
- You have received any untaxed income.
- You’re a partner in a business partnership.
- You’re liable to the High Income Child Benefit Charge.
- You’re a self-employed individual with a gross income surpassing £1,000.
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If this is your first time completing a Self-Assessment return, it’s essential to notify HMRC swiftly. The deadline to inform them is by 5 October following the tax year’s conclusion. And if the 2022-23 tax year applies to you, remember to electronically file your tax return and settle any tax obligations by 31 January 2024.
For personalized advice and further assistance, feel free to get in touch with our expert team at CIGMA Accounting. We’re dedicated to simplifying the complexities of the financial world for you.